2016 Revenue Resources Proposed Budget
Fiscal Awareness
Smaller municipalities like us, need to focus on
revenue as a priority; expenditures are under more
direct control of department heads and can be
managed more effectively. Decisions from elected
officials are transmitted directly to the authorizing
staff members.
Elected officials understanding of the processes
help manage resources and the emphases on the
importance of revenue.
Basis of Accounting
• The State of Washington and the State’s Auditor’s Office set
the accounting standards that we use here in Yacolt. As such,
Yacolt records revenue and expenses on a cash-basis, similar
to most small businesses, and is required to have an audit
every two – three years depending on the type of audit. We
prepare a budget every year and by law, we are not allowed
to operate in a deficit.
• The Town uses fund accounting which is a way to separate
activities by type. In broad terms the Town has three major
types of activities– governmental, proprietary and capital
projects. Governmental activity, often called the Operating
Budget, includes police, streets and park services and is what
most people think of when they think of government (at least
when they’re being kind). Property taxes are the main source
of revenue funding the Operating Budget.
• Proprietary activity includes utility services –
storm water, cemetery and it is funded through
user fees. By law we cannot use your
stormwater and utility fees to support general
government and the operating budget.
• Capital Projects are the last major type of
activity. As the name implies these are
construction projects which can be governmental
or proprietary in nature depending on the
project. These are usually funded by major
grants.
Property Tax Revenue
Property taxes are single most valuable
resource for the town.
With out property tax revenue Yacolt would
cease to exist as a Town.
This revenue type is the only source that is
guaranteed to be a steady source of funding.
1/3 of the property tax dollars that are allocated
to the town are placed in the General Fund or
General Operating Fund
2/3 of the property tax dollars that are allocated
to the town are placed in the Street Fund
Each year municipalities, fire districts, are
allowed to increase property tax levy by 1%
without a vote of the people.
Does the Town keep all collected tax
dollars?
NO
The town only gets to keep a portion of the
total tax dollars that are collected. The funds
collected are distributed to various districts in
the county.
Property Tax Pie Chart
Cities & Towns
14%
Counties
18%
Schools
55%
Other
*8%
Fire District
5%
*Includes regional districts such as libraries, parks and recreation,
emergency medical and hospitals. Not necessarily located in the Town.
* Does not reflect the additional levy passed by local fire district
Doing a lot with a little
And yet that 14% sliver provides us with the
largest portion of our total operating
revenues.
That means we provide the bulk of our
services, public safety, parks and streets with a
relatively small amount of your money. Here’s
a chart showing how your property tax dollar
is used.
How do we apply tax dollars?
General
Operations
30%
Streets
70%
This does include State Share Revenue which makes up the
difference in fund totals, however these revenues vary from
year to year depending on legislation.
The Recovery
Now that the recovery has begun, home values in Clark
County are rising fast. The formula for calculating the
[total levy dollar amount] for districts is changing and
they are no longer hitting their rate limits. However,
there are still limits on the growth of the [total levy
dollar amounts]. These growth limits are not intended
to limit districts in their ability to return to prerecession levy levels. That’s where banked capacity
comes in – it allows districts to recover from the
recession as fast as home prices recover. Banked
capacity is mathematically designed to “dry up” once
the county, home prices, and districts have completed
their recovery, allowing the limits on the growth of the
[total levy dollar amounts] to kick back in.
How much money was collected from
residents in Town?
In 2015 the amount that should be collected
from property tax to support services was
certified by the County Assessor at a value of
$173,769.12. That equates to $2.1145657959
per $1000 in assessed value.
1/3 of which goes to the general fund and 2/3
going to the street fund.
Keeping in mind that this is dependent on if
everyone pays their property taxes.
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RECAP
Most levies in Clark County are subject to several limits, some are on the
growth of the levy, while others are on how the levy is calculated.
During the recession, many districts hit their levy rate limit; this made their
levies drop in step with the drop in home and other values within them.
Now that the recovery has started, home values are rising quickly. To allow
the districts to recover at the same pace, they can now use what’s called
banked capacity to ask for growth in their levy that is higher than the
normal 1% limit.
The capacity to ask for faster growth is still limited by the rate limit, which
means districts cannot recover faster than the home or other property
values within them.
A district can use their banked capacity each year until the values within
them recover and their limit on levy growth kicks back in.
All other things being the same, by using banked capacity to its fullest
potential, taxpayers will see their total levy bill from our district rise back to
pre-recession levels roughly at the same pace the value of their home or
other property recovers.
It is likely that the town will have no banked values to use in 2016 which will
limit the revenue source to the constitutional limit of 1%.
What are State Share Revenues
These are tax dollars collected that are shared
among the county, cities and towns based on per
capita and % that are determined by the State
Legislative Authority.
Examples of Share Revenue are:
1. Motor Vehicle Tax
2. Liquor Tax
3. Liquor Excise Tax
4. City Assistance
5. Liquor Profits
6. Criminal Justice
7. Marijuana Taxes
However these revenues are governed by the
State in how they are allocated to funds and
how they are allowed to be spent.
Liquor Taxes
In the past cities/towns collected these funds
which assisted in the ability to balance
budgets, but with the passage of Initiative
1183 that all changed. The State passed
legislation in the past 4 years that is having an
impact on the revenue received by cities.
Since 80% of liquor excise tax is distributed to
cities and 20% to counties, $2 million of this
quarterly transfer comes out of city money
and .5 million from the county money.
2014-2016 State budget, passed by legislators
contains a provision that decreases slightly
their take of the money from cities and
counties.
Currently there is legislation that remains in
conflict. There continues to be dialog on this
subject.
AWC ( Association of WA. Cities) is lobbying
hard on behalf of all the cities and counties in
the State. They are working toward a
resolution to resolve the differences and “put
back revenue”. When there is a decision we
will know.
These funds are distributed to both the
General Operating Fund and Streets and
make up the difference in fund revenue.
What other revenue resources are
available?
Additional components of revenue sources are
even less of a guarantee:
1. Charges for Services
2. Licenses and Permits
3. Fines and Forfeitures'
Charges for Services funds come from things
like faxes, notary, rentals, copies etc.
Licenses and Permits funds come from business
licenses and building permits. While minor
construction is on going in the Town, housing and
major construction is at a crawl. This has a large
impact on Streets and Parks since most of the
funds collected benefit those areas.
Business Licenses have been somewhat consistent
revenue over the last couple of years. The
challenge is keeping business’ here and doing
business. Other side is catching those who are
doing business in the Town with out a
license/permit.
Fines and Forfeitures funds come from the Criminal
Justice funds that are allocated to the Town. These
come from criminals who are fined and must pay
restitution. Again based on per capita. We only receive
68% of total fine/restitution and the remaining 32%
goes to the state. In addition 1.75% of the local portion
must be remitted to the county for crime victims and
witness programs. (NOTE: all money received from DUI are
remitted to the state not locally).
Some of the funds also come from local
fines such as animals at large, no pet license
but we have to catch them and then find
the owners and hope they pay. IF not it is
a charge to the town to have animal control
pick up the animals and only if the owners
retrieve their pet do we collect funds.
We have limited animal control services.
Storm Water Fees
Yacolt residents pay storm water fees that are
realized on their monthly Clark Public Utility Bills.
While this is a source of revenue it has restrictions
as indicated above in Basic Accounting. This is a
separate fund that has limitations on expenses that
can be charged to it. Examples: drainage, soil and
water conservation, engineering plans and studies,
repairs and maintenance. These are NOT funds that
can be used in General Operations
Sales Taxes
These are taxes that are collected from retail sales, internet
based sales and other types of business that charge sales
tax. Yacolt currently does not have a sales tax on internet
based sales. Revenue from these sources are dependant on
sales. Having a town with few business’ does not afford a
lot of revenue from this source.
Additionally there are taxes that are collected from
telephone use, cable and other utilities. There is no
competition for the utilities to increase the tax base.
All of these types of taxes are allocated to General
Operations to fill in where there is no property tax
allocation.( Remember only 33% of property tax dollars go
to the General Fund) They are based off of per capita/%
calculations through the State Treasurer.
Do you know how Retail
State Sales Taxes are
distributed?
Public Safety
1%
Juvenile/Jail Tax
1%
Mental
Emergency
Communications Health
1%
1%
Public Facilities
1%
Criminal Justice
1%
Clark County
PTBA - STA
2%
7%
Town of Yacolt
10%
State
75%
State
Town of Yacolt
Clark County
PTBA - STA
Criminal Justice
Public Safety
Juvenile/Jail Tax
Emergency Communications
Mental Health
Public Facilities
REET/ Real Estate Excise Tax
These are tax revenues that are distributed
from the State Treasurer. These are treated
much like Storm Water. They have restrictions
on how they are spent. They are not for
general operations or for administration costs,
however 1% can be used for administrative
costs in the Street Fund currently. These funds
are used for Capital Improvements.
USE FEES
Yacolt has an ordinance in place that would allow for the collection of use fees
for the local parks including rentals, however the town currently does not
charge for those services. The maintenance and repairs to the parks far
exceeds the minimal amount of revenue collected to support these services.
What about
the Marijuana
Tax?
Revenues that we do not receive like
other municipalities
• Lodging (Hotel-Motel) Tax
Cities may tax the amount charged by hotels,
motels, roaming houses, private campgrounds, RV
parks, and similar facilities for periods of occupancy
of less than one month. The tax is collected as a
sales and use tax by business and is paid by the
customer at the time of transaction.
These can also be used toward tourism.
Since the town does not have any of the above we
do not collect for this.
Gambling Excise Tax
• Cities are authorized to collect taxes on gambling
activities within specified limits. The state does
not impose gambling excise taxes. The state
makes a distinction in what gambling activities
can be taxed and in tax rates based on whether
the gambling activities are conducted by
charitable and non profit organizations or
whether they are conducted for profit. There are
maximum rates depending on the activity.
Since we do not have a casino or card room this
also is tax that we do not collect.
Local Option Commercial Parking Tax
• This tax may be levied by a city within its
boundaries and by a county in the
unincorporated areas. There is no limit on this tax
rate and many ways of assessing the tax are
allowed. Rates vary by any reasonable factor,
including location of the facility, time of entry and
exit, duration of parking, and type or use of
vehicle. The parking business owner collects this
tax and remits to the county for remittance.
There are currently no counties that levy this tax
but there are 6 cities in the state.
Transportation Benefit Sales Tax
• Cities may form a transportation benefit district under
RCW 36.73 to acquire, construct, improve, provide, and
fund transportation improvements. One funding option
is a voter approved 0.2 percent sales tax. The sales tax
may be levied for an initial 10 years and renewed for
another 10 years with a vote.
• Additionally a Transit Sales and Use Tax may be levied
up to 0.9 percent for public transportation uses.
We have discussed in the past the creation of
transportation benefit district charging a flat fee for
vehicle licenses in order to fund transportation
improvements. We have not moved forward as of yet.
High Capacity Transportation
• Any county or city with a transit system,
metropolitan municipal corporation, public
transportation benefit area, high capacity
transportation corridor area or regional transit
authority may ask the voters to levy up to 1.0
percent sale and use tax specifically for high
capacity transportation systems. The tax must be
voter approved by majority of the vote. Currently
larger cities such as King, Snohomish, and Pierce
Counties have this tax levy.
• Why Government is not Like a Business
• It’s popular these days to ask why government can’t be
more like a business. Although there are some parts of
government that act like a business, the construct of
government is the opposite of business in some
important ways. Let’s start with a central proposition.
• Government is often criticized for it’s for “tax and
spend” policies; however that is the foundation of
government. The revenue has to come first, nothing
can happen without it.
• In business, as the saying goes, “You have to spend
money to make money.” So for business it’s opposite of
the government. In business, you incur expenses first in
the hope of making money later.
• The table below highlights some of the ways in which
government and business are different
Government vs. Business
Government
Business
Business Cycle
Tax and then spend.
Spend and then earn
revenue.
Intent
Provide service by
maximizing spending on
clients.
Earn profits by minimizing
spending on goods and
services sold to clients.
Payroll
Limited to resources avail.
Minimize worker’s pay.
Budgeting
Maximize services up to
revenue available.
Minimize costs under
revenue available.
Communication
Principals make decisions
in public.
Principals make decisions
in private.
Mobility
Governments can’t
relocate.
Businesses can relocate.
We present these differences not to create a fight, as both are legitimate
models, but to encourage you to see that we have a different perspective
from the business world. One common trait government and business share
is the need for efficiency. And we strive for that here in Yacolt especially in
the tough economic times that we all face.
The Challenges
2016 Yacolt has elected not to proceed with Community Block Grant funding as it has in the
past few years.
The maintenance ~ repairs for 2 Parks~Streets~Sidewalks Stormwater ~ Easements
Town Hall~ and other properties * note vandalism is rising at a fast pace.
Continuing the current level of services with rising costs to citizens
Inflation rate ~ Can only increase property tax 1%
State Share Funding decreases without intervention from Legislators
No Citizen support for the future development of Yacolt
Limited amount of Sales Tax Revenue ~ No new Business planned for 2016
Workers Compensation Costs in 2016 increase by 8% for Public Works
decrease by 3% for Administration
Rising Health Care Costs ~ Employer Contributions ~ Legal Council Costs
No new development/construction or business relocation in Yacolt
( 1 small subdivision planned for late 2016/2016 )
Council is tasked with planning for the long term
and replacing funds expended for infrastructure
since funds were diverted to account for expense.
Mayor is tasked with maintaining core mission,
priorities and operations.
Flat to declining revenue streams of the past have
had an affect on the budget. However the budget is
a small piece of long term planning.
What Changes Have Been Made
2015?
• Local businesses are working
together
• Building Department was
implemented
• Compliance from citizens on
permits increasing
Ideas to Increase Revenues
1.
2.
3.
4.
5.
Create a transportation benefit district
Sales Tax increase / Levy Lid Lift
Support local business
Zoning changes
Reach out to business to locate here
Your ideas are Welcome!!
Estimated Levy Increase
Actual assessed values due at the end of October.
We can only estimate on the limit we currently
have.
Actual Levy for 2015 = $173,572.94 x constitutional
limit of 1% increase = 173,572.94 x 101 = 17,530.87
17,530.87 plus the $173,572.94 = estimated levy
collection of $191,103.81 for 2016
BUT WAIT!
We don’t know yet what the YACOLT actual
assessed valuations are yet……………
This is purely a guess ~
an estimate ~
and desired outcome~
It’s Just a
REVENUE ESTIMATE !
2016 Estimated Revenue
Budget
Budget Revenue Estimate 2016
**Excludes Beginning and Ending Balance
Except Reserve Fund Included
** Excludes Money Market Investment
BUDGET COMPARISON FUND TOTALS
Fund
2014 Actual
2015 Appropriated vs Actual
001 General
335,991.54 281,615.00
002 Reserve
101 Streets
206,235.83 169,280.00
103 Cemetery
9,898.03
8000.00
105 REET
12,438.95
7,500.00
114 Park Impact ( none collected )
115 Trans. Impact ( none collected )
403 Storm Water 34,343.45
50,0000
323,076.30
115,332.54
115,836.73
7291.94
5,38.19
1,800.00
2,050.00
34,334.86
2016 Proposed
314,712.00
115,332.54
174,964.00
8000.00
7,500.00
5,400.00
6,150.00
45,000.00
Funds 114 and 115 proposed for 2016 are based off 3 houses being built
How do we Budget
1)
2)
3)
4)
We budget for outcome
We budget for goals
We budget for long term expectations
We budget for capital improvements
“We budget for Success”
QUESTIONS?